HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Power International Development / Equity Bottom-Up

China Power International Development (2380 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-power-international" target="_blank" data-smartkarma-citation="entities:15548:1" rel="noopener">China Power International (2380 HK)</a> is the hardest hit in this round of market sell-off with a 28.9% plunge in share price in Sep - we think this is overdone. </li>
<li>Coal-Fired margin, which is the key drag in 1H22, will improve in 2H22. Its clean energy segment has performed well, and new capacity acquired will start to provide contribution.</li>
<li>Its strategic transformation target of over 90% of capacity from new energy by 2025, up from 50.7% in 1H22, has not changed. Parent asset injection will generate massive upside potential. </li>
</ul>



China Power International (2380 HK) is the hardest hit in this round of market sell-off with a 28.9% plunge in share price in Sep - we think this is overdone. 
Coal-Fired margin, which is the key drag in 1H22, will improve in 2H22. Its clean energy segment has performed well, and new capacity acquired will start to provide contribution.
Its strategic transformation target of over 90% of capacity from new energy by 2025, up from 50.7% in 1H22, has not changed. Parent asset injection will generate massive upside potential. 


China Power International (2380 HK): We Think Good Opportunities Are Presented

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

China Datang Renewable Power / Equity Bottom-Up

<ul>
<li>Low valuation against peers in China albeit <a href="https://www.smartkarma.com/entities/china-datang-corp-renewable-power-co-ltd" target="_blank" data-smartkarma-citation="entities:15736:1" rel="noopener">China Datang Corp Renewable Power (1798 HK)</a> is one of the few pure-play wind farm operators in HK. </li>
<li>Its free cash flow reached its highest in more than 10 years. </li>
<li>The challenging equity market makes China Datang Renewable Power looks even more attractive.</li>
</ul>


Low valuation against peers in China albeit China Datang Corp Renewable Power (1798 HK) is one of the few pure-play wind farm operators in HK. 
Its free cash flow reached its highest in more than 10 years. 
The challenging equity market makes China Datang Renewable Power looks even more attractive.


China Datang Renewable Power (1798): Ideal Name for ESG Fund.

China Longyuan Power Group / Equity Bottom-Up

<ul>
<li>With concerns on weaker 1H22 profit and lower industry return (due to Lianjiang offshore project) now behind us, <a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> is well set for better 2H22.</li>
<li>Utilisation hours should see improvement while new capacity growth is another major driver. The upgrades of aged and small-sized units will almost double its existing capacity. </li>
<li>Receipt of Rmb11.4bn subsidies clearly represented an acceleration in collection. This will stay as contributor to better cash flow and enhance financial position. </li>
</ul>


With concerns on weaker 1H22 profit and lower industry return (due to Lianjiang offshore project) now behind us, China Longyuan Power (916 HK) is well set for better 2H22.
Utilisation hours should see improvement while new capacity growth is another major driver. The upgrades of aged and small-sized units will almost double its existing capacity. 
Receipt of Rmb11.4bn subsidies clearly represented an acceleration in collection. This will stay as contributor to better cash flow and enhance financial position. 


China Longyuan (916 HK): Brightened Prospects

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cgn-power-co-ltd-h" target="_blank" data-smartkarma-citation="entities:58:1" rel="noopener">CGN Power (1816 HK)</a>, as China's largest nuclear power company, has its profit outperformed coal-fired and wind power peers in 1H22 given its stable cost control and higher tariff.  </li>
<li>We expect contribution from Hongyanhe #6, normalised operations from existing projects, further margin expansion, solid project pipeline and positive new project potential to be the key earnings drivers. </li>
<li>Its target to reach capacity of 70GW by 2035 should underpin long-term outlook. YTD, the stock has outperformed most peers, yet valuation multiples are still cheaper than peer average.</li>
</ul>



CGN Power (1816 HK), as China's largest nuclear power company, has its profit outperformed coal-fired and wind power peers in 1H22 given its stable cost control and higher tariff.  
We expect contribution from Hongyanhe #6, normalised operations from existing projects, further margin expansion, solid project pipeline and positive new project potential to be the key earnings drivers. 
Its target to reach capacity of 70GW by 2035 should underpin long-term outlook. YTD, the stock has outperformed most peers, yet valuation multiples are still cheaper than peer average.


CGN Power (1816 HK): Building up Stronger Potential

<ul>
<li>Share price of <a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> has been under pressure over the last two weeks due to concern on future offshore wind power project return.</li>
<li>We believe the low tariff of Rmb0.19/kWh won by a Huaneng Power Group consortium in Fujian is more an exceptional case and should not be taken as a new normal.</li>
<li>China Longyuan's growth has been well secured by its project pipeline as well as 21GW potential injection from parent. This round of de-rating is just too excessive. </li>
</ul>


Share price of China Longyuan Power (916 HK) has been under pressure over the last two weeks due to concern on future offshore wind power project return.
We believe the low tariff of Rmb0.19/kWh won by a Huaneng Power Group consortium in Fujian is more an exceptional case and should not be taken as a new normal.
China Longyuan's growth has been well secured by its project pipeline as well as 21GW potential injection from parent. This round of de-rating is just too excessive. 


China Longyuan (916 HK): A De-Rating Too Excessive

China

China Longyuan Power Group is a leading power producer primarily engaged in the generation and sale of wind and coal power, alongside other renewable energy projects such as solar, tidal, biomass, and geothermal. The company also manufactures power equipment and provides related consulting, maintenance, and training services. It was founded in 1993 and is headquartered in Beijing, People's Republic of China.

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China Longyuan Power Group (916 HK)

China Power International (2380 HK): We Think Good Opportunities Are Presented

CPI's share price has overly reacted to market's concern on slowing economic and power demand outlook. Its new energy transformation and parent...

Osbert Tang, CFA

China Datang Renewable Power (1798): Ideal Name for ESG Fund.

Posted highest free cash flow since 2009 while still trading below book value. With a low valuation, high FCF, and CO2 emission reduction, this...

Henry Soediarko

China Longyuan (916 HK): Brightened Prospects

Longyuan will see a stronger 2H22, boosting by additional capacity and utilisation hour improvement. Its secured pipeline and ambition to add 30GW...

Osbert Tang, CFA

CGN Power (1816 HK): Building up Stronger Potential

Contribution from Hongyanhe #6, normalised operations from existing projects, further margin expansion, solid project pipeline and positive new...

Osbert Tang, CFA

China Longyuan (916 HK): A De-Rating Too Excessive

The plunge in valuation has more than reflected the concerns on weaker return outlook for offshore wind power projects, but China Longyuan's long...

Osbert Tang, CFA

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